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(b) Minty company's policy is to maintain a cash balance of at least $80,000. Daily cash balances have a standard deviation of $8,000. On a
(b) Minty company's policy is to maintain a cash balance of at least $80,000. Daily cash balances have a standard deviation of $8,000. On a daily basis, the interest rate is 0.02%. Each transaction involving the sale or purchase of securities is subject to a transaction fee of $20. Calculate the return point of the Miller-Orr model and, using your understanding, explain when this model should be implemented. (10 marks)
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